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Former Refco Inc. CEO Phillip Bennett is under house arrest in New York awaiting trial on securities fraud charges related to false accounting at the commodities and securities broker that collapsed in a little more than a week in October 2005. The source of the company's problems was that its books carried $430 million in loans for which Bennett was liable, although that fact was not quite disclosed. Once revealed, Bennett re-payed that amount with funds from a loan made by Bawag (Bank Fuer Arbeit und Wirtschaft ), an Austrian bank, that was secured by soon-to-be worthless Refco stock. Needless to say, that loan went sour almost before the ink dried on the papers, and Bawag is now among the many unsecured creditors of Refco, a position no one ever wants to be in when a company enters bankruptcy. Now, the Vienna public prosecutor has issued warrants for the arrest of Bennett and Wolfgang Floettl Jr., the son of Bawag's CEO who authorized the loan to Bennett, on fraud charges. The Bennett loan is part of over $1 billion in losses the bank suffered from its dealings with Refco, including various transactions with Refco through its Caribbean affiliates in accounts listing non-existent bonds. Bennett has remained silent so far, and the case may never be fully sorted out if he does not eventually cooperate. An AP story (here) discusses the Austrian prosecution. (ph)